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THE SUPREME COURT OF APPEALREPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No 272/09
In the matter between:
3M SOUTH AFRICA (PTY) LTD Appellant
and
THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE First Respondent
THE MINISTER OF FINANCE Second Respondent
Neutral citation: 3M South Africa v CSARS (272/09)[2010] ZASCA 20 (23 March 2010)
Coram: NAVSA, CLOETE JJA and GRIESEL, SERITI, and SALDULKER AJJA
Heard: 18 February 2010
Delivered: 23 March 2010
Summary: Customs and Excise Act 91 of 1964 – importer’s entitlement to refunds and liability for arrear import duty arising from incorrect determination by Commissioner.
ORDER
On appeal from: The North Gauteng High Court, Pretoria (Louw J
sitting as court of first instance):
1. The appeal is upheld to the following extent:
1.1 Paragraph 2 of the order of the high court is set aside and replaced
with the following:
‘2.1 Prayer 3.2 of the notice of motion is dismissed together
with the costs incurred in respect of the relief set out in
that paragraph.
2.2 It is declared that the amount of customs duty
(R3 598 971,70) and interest thereon (R1 890 959,72),
demanded from the applicant in the first respondent’s
letter of demand dated 10 August 2007 (annexure FA27 to
the founding affidavit) is not payable by the applicant to
the first respondent.’
1.2 Paragraph 3.4 of the order of the high court is amended to read:
‘3.4 pay the applicant’s costs incurred in respect of the relief
set out in paragraphs 2.2, 3.1, 3.2 and 3.3 above, such
costs to include the costs consequent upon the employ
ment of two counsel.’
2. The first respondent is ordered to pay the costs of the appeal,
including the costs of two counsel.
2
JUDGMENT
GRIESEL AJA (NAVSA and CLOETE JJA, SERITI and SALDUKER
AJJA concurring):
[1] The appellant launched an application in the North Gauteng High
Court, Pretoria against the first respondent, the Commissioner for the
South African Revenue Service (‘the Commissioner’), for declaratory and
ancillary relief based on certain provisions of the Customs and Excise Act
91 of 1964 (‘the Act’).1 The application succeeded in part and, with leave
of the high court, the appellant appeals to this court against those parts of
the order in respect of which it was unsuccessful.2
[2] The appeal concerns, on the one hand, the appellant’s entitlement
to refunds of customs duty paid on certain imported goods and, on the
other hand, its liability for unpaid customs duty allegedly owing in
respect of such goods. In respect of both issues the classification system
created by Schedule 1 to the Act and the determination of the appropriate
classification by the Commissioner play a pivotal role. However, it is not
necessary for purposes of this appeal to embark upon the intricacies of
tariff classification which, according to the deponent to the
Commissioner’s answering affidavit, is ‘notoriously difficult’.3 In this
case, the Commissioner, during April 1991, determined a tariff heading,
1 The Minister of Finance was originally joined as the second respondent, but played no further role in the litigation after the appellant’s challenge to the constitutionality of s 76B of the Act was abandoned. 2 The judgment of the high court has been reported as 3M SA (Pty) Ltd v The Commissioner for the South African Revenue Service 2009 JDR 0481 (GNP). 3 As to the process of classification, see eg International Business Machines SA (Pty) Ltd v Commissioner for Customs and Excise 1985 (4) SA 852 (A) at 863G–864C. See also CSARS v Fascination Wigs (Pty) Ltd [2010] ZASCA 6 para 9 and the cases referred to therein.
3
under which the goods in question were categorised, attracting customs
duty at a rate of 20%. It is common cause that this determination was
incorrect. It was eventually corrected many years later, in 2006. What we
are concerned with are the consequences of the new determination, made
with retrospective effect.
Statutory framework
[3] In terms of s 47(1) of the Act customs duty is payable on all
imported goods in accordance with the provisions of Schedule 1. In Part 1
of the Schedule all goods generally handled in international trade are
systematically divided into numerous tariff headings and subheadings.
The tariff subheading within which imported goods fall determines the
rate at which the goods attract payment of customs duty (if any). Many of
the tariff subheadings provide that the goods specified may be imported
free of customs duty.
[4] In terms of s 47(9)(a)(i) the Commissioner may in writing
determine the tariff headings, tariff subheadings or tariff items or other
items of any Schedule under which any imported goods shall be
classified. Determinations are subject to appeal to the high court having
jurisdiction, which appeals must be prosecuted within a period of one
year from the date of the determination.4
[5] A determination may also be amended, withdrawn, or another
determination substituted for it with retrospective effect. Where the
original determination was made in bona fide error of law or of fact (as
4 Section 47(9)(e) and (f). For a very recent example of such an appeal, see CSARS v Fascination Wigs above.
4
happened in this instance), a new determination may be made with effect
from the date of the original determination.5 Alternatively, the amended
determination may be made with effect from the date of the amendment
of the previous determination or the date of the new determination.6
[6] A proviso to s 47(9)(d) that is particularly relevant to the present
enquiry reads as follows:
‘Provided that whenever any amendment of a determination or a new determination is
effective from a date resulting in the person to whom the determination was issued –
(a) being entitled to a refund of duty, such refund shall be subject to the
provisions of section 76B;
(b) retrospectively incurring an increased liability for duty, such liability shall . . .
be limited to goods entered for home consumption during a period of two
years immediately preceding the date of such amendment or new
determination.’
[7] The material portions of s 76B to which reference is made in the
first proviso quoted above reads as follows:
‘(1) Notwithstanding any other provision of this Act, . . . where any person
becomes entitled to any refund or drawback of duty –
(a) in the case of any determination, new determination or amendment of any such
determination in terms of section 47(9) . . . , such refund shall be limited to –
(i) a refund in respect of goods entered for home consumption during a
period of two years immediately preceding the date of such
determination, new determination or amendment, whichever date
occurs last; . . . and
(ii) any application for such refund which is received by the Controller
within a period of 12 months from the date of –
5 Section 47(9)(d)(ii)(cc).6 Section 47(9)(d)(ii)(dd).
5
(aa) such determination, new determination or amendment of a
determination. . . .’
Factual background
[8] The appellant has been conducting business as an importer of
Interam Brand mats (‘the mats’) since June 1990. These mats are made
up, inter alia, of ceramic fibre mineral wool which is used, after press
cutting thereof into shapes, in the manufacture of automotive catalytic
converters for exhaust emission control systems. All such converters were
destined for the export market, but the appellant was not responsible for
either the manufacture or the export thereof.
[9] On 11 June 1990, acting in accordance with the provisions of
s 47(9)(a)(i), the Commissioner determined the mats to be classifiable
under tariff subheading 6806.90.90 of Part 1 of the Schedule (‘the 1990
determination’). The effect of this determination was that no customs
duty was payable in respect of the imported mats.
[10] However, less than a year later, in terms of a new tariff
determination, dated 9 April 1991 (‘the 1991 determination’), the
Commissioner amended his earlier decision and determined the mats to
fall under tariff subheading 6806.10, with the result that customs duty at a
rate of 20% became payable in respect of the imported mats as from that
date.
[11] On 4 July 1992 the appellant obtained registration as a rebate store
for purposes of importing the mats under a full rebate of duty in terms of
Rebate Item 470.03 in Part 3 of Schedule 4 to the Act. The effect thereof
6
was that as long as the applicant complied with the rebate conditions, it
paid no customs duty in respect of the mats. Two of those conditions
were that the goods imported had to be used for the processing and
manufacture of goods for export and the manufactured goods had to be
exported within 12 months from date of entry thereof.
[12] During January 2003, after an inspection by two SARS officials of
the appellant’s records, the Commissioner issued a letter of demand to the
appellant for payment of an amount of some R27 million in respect of,
inter alia, underpayment in customs duty and valueadded tax (‘VAT’).
As emerged subsequently, the demand was based on a contention that no
proof that the mats had been used in compliance with the relevant rebate
requirements had ever been furnished to the Commissioner, with the
result that the duty and VAT payable in respect of the mats should have
been paid by the appellant.
[13] On 25 March 2003, no doubt prompted by the Commissioner’s
letter of demand, the appellant applied to the Commissioner for a new
tariff determination in respect of the mats. However, on 22 April 2003 the
Commissioner again determined the imported mats to fall under tariff
heading 6806.10 (‘the 2003 determination’), at that stage attracting
customs duty at the rate of 15%.
[14] The appellant made further representations to the Commissioner to
change this determination, but on 25 September 2005 the Commissioner
reaffirmed the 2003 determination.
7
[15] In the meantime there had been a parallel exchange of
correspondence between the parties arising from the Commissioner’s
letter of demand issued in January 2003. Certain further information and
documentation was requested on behalf of the Commissioner, some of
which was furnished by the appellant. Many meetings also took place
which, however, did not resolve the differences between the parties.
Having considered the information furnished by the appellant, the
Commissioner, on 22 November 2005, issued an amended letter of
demand, claiming payment of some R16,4 million. Written reasons for
the decision were requested by the appellant and furnished by the
Commissioner.
[16] During January 2006 the parties agreed to refer the determination
issue to the World Customs Organisation (‘WCO’) for a nonbinding
advisory ‘ruling’. On 21 November 2006, after receipt of the WCO’s
‘ruling’, the Commissioner amended the classification of the imported
mats from subheading 6806.10 to 6806.90.90 (‘the 2006 determination’),
ie the determination contended for by the appellant. This decision
reinstated the earlier position that no customs duty was payable in respect
of the imported mats. With regard to the effective date of the new
determination, the Commissioner stated that the determination would take
effect as from 22 April 2003, ie the date of the 2003 determination. He
did so, however, in ignorance of the earlier 1991 determination. Having
been made aware of the true position, the Commissioner ultimately, in the
answering affidavit in the present proceedings, conceded that the
effective date of the 2006 determination ought to be 9 April 1991. He
8
accordingly did not oppose the appellant’s claim for a mandamus to that
effect.
[17] In a letter dated 10 August 2007, the Commissioner informed the
appellant of its rights arising from the 2006 determination, in particular,
its right to claim refunds of duties paid in respect of all goods imported
‘during the two years immediately preceding the 2006 determination, ie
from 22 November 2004 until 21 November 2006’. At the same time, the
Commissioner reiterated his earlier demand in respect of underpayment
of customs duty, based on the appellant’s alleged failure to furnish proof
that the mats had been used in compliance with the relevant rebate
conditions during the period 1 November 2000 until 1 February 2002. In
the circumstances, the Commissioner was holding the appellant liable for
payment of a reduced amount of some R11,9 million.
[18] The appellant took issue with the Commissioner’s contentions. In
launching its application in the high court, the appellant accordingly
sought an order (in prayer 1 of the notice of motion) –
‘. . . declaring that on a proper interpretation of s 47(9)(d)(ii)(cc) and s 76B of the
Customs and Excise Act, 91 of 1964, the Applicant is entitled to refunds in respect of
importations of the imported mats . . . for the period 1 March 2002 to 20 November
2004’.
The corollary to this declarator was a claim (prayer 3.2) for payment of
refunds in the amount of R8,8 million in respect of the same period. (The
appellant’s further claim (in prayer 3.1) for a refund in the amount of
R4,5 million in respect of the period 21 November 2004 to 20 November
2006, together with interest, was not contested by the Commissioner.)
Finally, the appellant also sought an order (prayer 7), ‘that the
9
[Commissioner’s] letter of demand dated 10 August 2007 . . . be
reviewed and set aside and that it be declared that the amount demanded
therein is not payable by the [appellant] to the [Commissioner]’. (By the
time the matter came to be argued in the high court, the appellant had
narrowed down the relief in prayer 7 by claiming an order declaring that
the amount of customs duty and interest thereon, demanded from the
appellant in the letter of demand of 10 August 2007, is not payable by the
appellant.)
[19] The high court held that the appellant was not entitled to the
declarator claimed in prayer 1 in respect of the full period, but that its
claim was limited to the period 21 November 2004 to 20 November 2006,
ie the twoyearperiod immediately preceding the 2006 determination. It
accordingly dismissed the claim for refunds arising during the earlier
period (prayer 3.2) and also dismissed the claim in terms of prayer 7.
[20] What falls to be decided in this appeal are the questions (a) whether
or not the appellant is entitled to a further refund of customs duty in
respect of the period 1 March 2002 to 20 November 2004; and
(b) whether or not the appellant is liable for payment of the additional
duty and interest as claimed by the Commissioner in his letter of demand,
dated 10 August 2007.
Appellant’s entitlement to refunds
[21] This claim must be determined with reference to the provisions of
s 76B(1)(a), which have been quoted above,7 more specifically the
7 Para 7 above.
10
expression ‘the date of such determination’8 as it appears in that
paragraph. The appellant contended that those words refer to the effective
date of the 2006 determination, which is 9 April 1991. In the result, so it
was contended, the two year period contemplated by para (a) is to be
calculated as from 9 April 1989. The Commissioner, on the other hand,
took up the attitude that the words in question refer to the date when the
2006 determination was made, ie 21 November 2006.
[22] The high court upheld the Commissioner’s interpretation,
reasoning as follows:
‘It was at the forefront of the legislature’s mind that there could be effective dates
going back many years, and it immediately made the right of recovery subject to
section 76B, which imposes a limit of two years. Secondly, whereas the terms “with
effect from” and “effective from a date” have just been used, and the concept of
effective date is being dealt with, it is striking to note that there is no reference to
effective date or the word effective in the relevant part of section 76B to which the
proviso refers.’9
After quoting the relevant portions of s 76B, referred to above, the
learned judge proceeded as follows:10
‘The phrase highlighted above, namely “the date of such determination” is clear and
has to be given its usual meaning. The date of the relevant determination is 21
November 2006. I find it obvious that the legislature would have used the concept of
effective date in section 76B(1)(a)(i) if that was intended. If the Act was intended to
limit the right of refund not to the period of two years preceding the date on which the
determination was made, but to a period of two years preceding the effective date
thereof, it would have stated so.
8 Afrikaans: ‘die datum van sodanige bepaling’. 9 Judgment para 22. 10 Paras 24–26.
11
The applicant protests that this construction leads to unjust, even absurd,
consequences. Pointing to various letters and memos exchanged between the parties
and their legal representatives during the process of having the determination
amended, it is argued that the first respondent now profits by its own delay, ie by not
having made the correct determination much earlier, ie at a stage when the applicant
first protested that the classification was wrong. The process of arriving at the
redetermination of 21 November 2006 included a detailed submission on behalf of the
applicant by South African Customs & Trade Specialists CC dated 10 August 2005
and an eventual referral of the issue to the World Customs Organisation (WCO) by
agreement between the parties during about January 2006. It was after the WCO’s
“determination” that the first respondent amended the tariff determination during
November 2006.
The short answer to these arguments of the applicant is that it was at all times open to
the applicant to appeal the wrong determination and so limit its loss. The proviso to
s 76B(1)(a)(i) . . . makes it clear that in the case of any appeal against a
determination, the twoyear period shall be calculated from the date of such appeal, ie
the two years preceding the date of the appeal. The applicant did not appeal any of the
wrong determinations, namely: 9 April 1991, 22 April 2003 and 22 September 2005.’
The learned judge accordingly concluded ‘that the plain meaning of the
relevant part of s 76B is clear and that no absurd consequences follow’.11
[23] Before us, counsel for the appellant assailed the reasoning of the
high court and reiterated the main argument that, on the Commissioner’s
interpretation, he can deprive the appellant of its right to refunds by
simply delaying (for whatever reason) the decision to correct the
determination.
11 Judgment para 28.
12
[24] I am unpersuaded by this argument. As rightly pointed out by the
high court,12 it was at all times open to the applicant to appeal the wrong
determination in terms of s 47(9)(e) and so limit its loss. It is thus clear
that a disgruntled importer can, at least to this extent, curtail any delay on
the part of the Commissioner. Counsel has been unable to point to any
absurd consequences that will flow from adopting the high court’s
interpretation of the expression ‘the date of such determination’ and I am
unable to find any. I am satisfied that the interpretation of s 76B
advocated by the Commissioner and adopted by the high court is indeed
the correct one.
[25] I am fortified in this conclusion by the fact that the expression ‘the
date of such determination’ is used, not only in subparagraph (i) of
s 76B(1)(a), but also in the very next subparagraph (ii), where an
application for a refund is required to be received within a period of 12
months from ‘the date of such determination’. It is a wellestablished
principle of statutory interpretation that ordinarily the same words and
phrases in a statute bear the same meaning.13 As it was put by Kriegler J
in S v Dlamini; S v Dladla & others; S v Joubert; S v Schietekat:14
‘It is of course most unusual to find one and the same expression used in one and the
same statute but not bearing a consistent meaning. In our law the Legislature is
presumed to use language consistently and one would deviate from the presumption
with great hesitation and only if driven to do so, for example, because to do otherwise
would lead to manifest absurdity or would clearly frustrate the manifest intention of
the lawgiver.’
12 In para 26 of the judgment, quoted above. 13 See 25(1) Lawsa (1st reissue) para 335 and the cases cited in n 1. 14 1999 (4) SA 623 (CC) para 47 (footnotes omitted).
13
[26] If the appellant’s interpretation were to be applied to the expression
‘date of such determination’ in both subparagraphs, namely to refer to
the ‘effective date’, then it would lead to the absurd result that, in the
present context, the application for a refund should have been submitted
within 12 months from the effective date, in other words by not later than
9 April 1992, whereas the new determination was only made in
November 2006. Faced with this incongruity, counsel for the appellant
was constrained to urge the court to depart from the ordinary principle
referred to above and to attach a different meaning to the expression in
the two consecutive subparagraphs, namely by interpreting the
expression as referring to ‘the effective date’ in subpara (i), but to ‘the
date the determination was issued’ in subpara (ii).
[27] In my view, a departure from the general principle is not
warranted, either by the clear wording of the relevant provisions or by the
context in which it appears. If the Commissioner’s interpretation is
applied to both subparagraphs, no absurdity follows. Then it simply
means that the appellant is entitled to a refund for a period of two years
preceding the date upon which the new determination is made and that its
claim for a refund must be received within a period of 12 months from
such date. The appellant’s interpretation, on the other hand, could
potentially give rise to liability going back many years (as in this
instance), which would be in conflict with the manifest purpose of s 76B,
namely to limit claims for refunds.15
15 See eg the heading to s 76B, which reads: ‘Limitation on the period for which refund and drawback claims will be considered and the period within which applications therefor must be received by the Controller’.
14
[28] It follows, in my view, that the first leg of the appeal cannot
succeed.
Appellant’s liability to pay customs duty
[29] I now turn to consider the question whether the appellant is liable
to pay arrear customs duty plus interest, as claimed by the Commissioner
in his amended letter of demand, dated 7 August 2007. With regard to
this aspect of the matter, the high court held as follows:
‘Whether this amount [ie the additional refunds claimed] is payable to the applicant
depends on an interpretation of the Act, specifically section 47(9)(d) and section
76B(1)(a)(i) thereof. The interpretation of these sections will also determine whether
the amount of R11.8 million claimed by the first respondent during August 2007 is
payable.’16
[30] In my opinion, the high court erred in holding that the fate of the
first claim necessarily determines the fate of the second claim or that
s 76B has anything to do with the second claim. It is clear that s 76B
expressly deals with refunds only and not with liability for additional
customs duty. For an answer to the latter question one has to look
elsewhere.
[31] Before doing so, however, it is necessary first to deal with a
preliminary objection raised on behalf of the Commissioner, based on the
provisions of the Promotion of Administrative Justice Act 3 of 2000
(‘PAJA’). It was argued that the August 2007 letter of demand was only a
further demand for payment of an amount that had become payable by
virtue of the January 2003 and November 2005 letters of demand. It was
16 Judgment para 15 (my emphasis).
15
those decisions of the Commissioner, so it was argued, that should have
been impugned on review, as that was the action which established the
appellant’s liability. However, by virtue of the provisions of s 7(1)(b) of
PAJA, any review of those decisions should have been instituted by the
appellant within 180 days after the appellant ‘was informed of the
administrative action, became aware of the action and the reasons for it or
might reasonably have been expected to have become aware of the action
and the reasons’, with the result, according to the Commissioner, that the
appellant’s right to impugn those decisions had become timebarred.
[32] The answer to this argument is that, in resisting the
Commissioner’s demand for payment of arrear import duty, the appellant
is not invoking judicial review as a remedy to set aside an unlawful
administrative act; instead, it is raising a ‘defensive’ or ‘collateral’
challenge to the validity of an administrative act, by which is meant ‘a
challenge to the validity of the administrative act that is raised in
proceedings that are not designed directly to impeach the validity of the
administrative act’.17 As it was put by Scott J in National Industrial
Council for the Iron, Steel, Engineering & Metallurgical Industry v
Photocircuit SA (Pty) Ltd & others:18
‘But the validity of administrative acts and subordinate legislation can be challenged
not only directly in review proceedings, but also indirectly or, as is sometimes said,
collaterally, ie in “proceedings which are not themselves designed to impeach the
validity of some administrative act or order” (Wade Administrative Law 6th ed at
331). Obvious examples are enforcement proceedings and criminal prosecutions, the
latter, according to Baxter (op cit at 706), being “one of the hardiest methods of
securing review”. In such proceedings, therefore, the need for judicial scrutiny of an
17 Oudekraal Estates (Pty) Ltd v City of Cape Town & others 2004 (6) SA 222 (SCA) para 32 (footnote 22). 18 1993 (2) SA 245 (C) at 252J–253D, referred to with approval in Oudekraal para 33.
16
administrative act or subordinate legislation arises not for the purpose of affording a
discretionary remedy, viz review or a declaratory order, but for the purpose of
determining the entitlement of the party seeking enforcement, or the guilt or
innocence of an accused person. The defendant or accused in such proceedings
cannot, it seems to me, be precluded from raising invalidity as a defence merely on
the grounds of delay. Indeed, if the position were otherwise it would be akin to a
defence to a claim becoming prescribed before the claim itself, which would be
untenable (cf McDaid v De Villiers 1942 CPD 220 and for comment thereon, see De
Wet and Yeats Kontraktereg en Handelsreg 4th ed at 273). In practice, therefore,
administrative acts and subordinate legislation are “reviewed” in criminal and
enforcement proceedings, in some cases many years after they were performed or
promulgated . . . .’
[33] In this instance, the Commissioner is seeking to coerce the
appellant into compliance with its demands for payment of import duty.
In an attempt to defend itself against such coercive power, the appellant is
mounting a collateral challenge to the validity of the underlying
administrative act on which such power is purported to be exercised.19 In
these circumstances, a defence based on delay – whether under the
common law or PAJA – is simply not available.
[34] Turning now to the merits of the Commissioner’s claim, he relied
heavily on the presumption that a statute ordinarily does not apply with
retrospective effect.20 Reference was made in this context to the principle
in Bell v Voorsitter van die Rasklassifikasieraad & andere21 in support of
an argument that in the absence of a clear intention to the contrary, a
19 Cf Oudekraal above, loc cit. 20 25(1) Lawsa (1st reissue) para 329. 21 1968 (2) SA 678 (A) at 683D–G. See also S v Mhlungu & others 1995 (3) SA 867 (CC) paras 65–67; Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines v Chairman, National Transport Commission & others; Transnet Ltd (Autonet Division) v Chairman, National Transport Commission & others 1999 (4) SA 1 (SCA) paras 18–19.
17
retrospective decision is not to be treated as affecting actions or
transactions that have already been finalised, stand to be finalised in due
course, or which are the subject of pending litigation. In developing this
argument, reliance was also placed on the wording of s 47(9)(b) as it read
at the relevant time, prior to its amendment in 2003 and 2007:
‘Any determination so made shall, subject to appeal to the Court, be deemed to be
correct for the purposes of this Act, and any amount due in terms of any such
determination shall remain payable as long as such determination remains in force.’
(My emphasis.)
According to the Commissioner, therefore, the appellant remains liable
for payment of customs duty in respect of the period 1 November 2000 to
1 February 2002, during which the incorrect determination remained in
force.
[35] I cannot accept this argument. It is settled law that the presumption
against retrospectivity can be rebutted, inter alia, where the retrospective
operation of a statute or a decision is provided for, either expressly or by
necessary implication.22 Thus, even pending legal proceedings may be
affected by a retrospective amendment where such an intention is clear.23
[36] Here, s 47(9)(d)(ii) of the Act specifically provides that an
amendment or new determination may be made ‘with effect from’ an
earlier date; in other words, there is a clear intention that the new
determination is deemed to have become operative at the earlier date.
What was intended, in other words, was true ‘retroactivity’, or
retrospectivity in the ‘strong’ sense.24 Applied to the present scenario, the
22 25(1) Lawsa 1st reissue (2001) para 329. 23 Compare in this regard Bartman v Dempers 1952 (2) SA 577 (A) at 582A–D.24 Cf Unitrans case, above, para 13; National Director of Public Prosecutions v Carolus & others 2000 (1) SA 1127 (SCA) paras 33–35.
18
new determination took effect and became operative ex tunc, ie with
effect from 9 April 1991. To hold otherwise would be to negate entirely
the effect of the retrospectivity of the 2006 determination and would
render the words ‘with effect from’ meaningless. Having said that,
however, it needs to be emphasised that the retrospective effect of the
new determination does not affect completed transactions, but only
applies in respect of uncompleted transactions, such as the
Commissioner’s demand for unpaid customs duty in this instance. The
dispute in that regard has been ongoing for a long period and it is truly
one that is covered under the rubric of pending legal proceedings.
[37] Moreover, in seeking payment of arrear import duty from the
appellant, the Commissioner is effectively relying on and seeking to
enforce his own mistakes, starting with the incorrect 1991 determination,
followed by the incorrect 2003 determination, followed by his subsequent
incorrect fixing of the effective date as being April 2003, instead of April
1991. The fact of the matter is that none of these incorrect determinations
should have been made. To allow the Commissioner now, in pursuing the
demand for payment, to rely on such mistakes would not only be grossly
unreasonable, but would offend against the principle of legality itself.
[38] For these reasons, I conclude that the appellant is not liable for the
arrear customs duty or interest claimed by the Commissioner in the letter
of demand, dated 7 August 2007. It follows that the appellant is entitled
to a declaratory order to that effect.
19
[39] To the extent that it has succeeded in resisting payment of the
amount claimed by the Commissioner, the appellant has been
substantially successful on appeal and is accordingly entitled to the costs
of the appeal, including the costs of two counsel.
Order
[40] The following order is issued:
1. The appeal is upheld to the following extent:
1.1 Paragraph 2 of the order of the high court is set aside and replaced
with the following:
‘2.1 Prayer 3.2 of the notice of motion is dismissed together
with the costs incurred in respect of the relief set out in
that paragraph.
2.2 It is declared that the amount of customs duty
(R3 598 971,70) and interest thereon (R1 890 959,72),
demanded from the applicant in the first respondent’s
letter of demand dated 10 August 2007 (annexure FA27 to
the founding affidavit) is not payable by the applicant to
the first respondent.’
1.2 Paragraph 3.4 of the order of the high court is amended to read:
‘3.4 pay the applicant’s costs incurred in respect of the relief
set out in paragraphs 2.2, 3.1, 3.2 and 3.3 above, such
costs to include the costs consequent upon the
employment of two counsel.’
2. The first respondent is ordered to pay the costs of the appeal,
including the costs of two counsel.
20
B M GRIESELActing Judge of Appeal
21
APPEARANCES
FOR APPELLANT: J P Vorster SC
N C Maritz
Instructed by: Wolvaardt Inc, Pretoria
Matsepes Attorneys, Bloemfontein
FOR RESPONDENT: J A Meyer SC
L G Kilmartin
Instructed by: The State Attorney, Pretoria
The State Attorney, Bloemfontein
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